Anatomy of downstream integration by oil‐producing countries

M. S. Robinson

Natural Resources Forum, 1989, vol. 13, issue 1, 71-74

Abstract: Forwards and backwards integration are natural phenomena in the oil business and it is certainly understandable that producer countries should wish to stabilize their position in this way. However, there are important differences between the present trend of downstream integration from the ‘classic’ model of the 1960s. There is no interconnection between supply sources or total coverage of the market, so the new approach does nothing to balance supply and demand. The producers need to be very careful to maintain strict commercial criteria for crude supplied to downstream assets and for money invested in downstream assets, otherwise they will merely transfer competition from the crude market to the product market. The best approach is to allow a swap of assets in both the upstream and the downstream on sensible commercial terms.

Date: 1989
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Persistent link: https://EconPapers.repec.org/RePEc:wly:natres:v:13:y:1989:i:1:p:71-74

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